Venture Explains: Saudi Arabia’s Vision 2030

November 29, 2016 /
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What is it? Plunging oil prices since mid-2014 have pushed Saudi Arabia to produce Vision 2030, a far reaching reform plan unveiled earlier this year that aims to wean the kingdom’s economy off its reliance on oil, which the government depends almost entirely on for its revenues.

What measures have so far been taken? Saudi Arabia managed to amass up a record budget deficit last year of almost $100 billion, forcing it to tighten purse strings and find new ways to raise cash. In an unprecedented move, ministers’ salaries were slashed by 20 percent. Some perks for public sector employees were also scaled back; housing and car allowances for members of the appointed Shoura Council were cut by 15 percent, for example. Visa costs to visit Saudi Arabia for the Hajj and Umra pilgrimages are being hiked significantly. While plans are well underway to sell off part of state-owned oil giant Saudi Aramco in a mammoth IPO. The company could be worth anywhere between $2 trillion and $3 trillion, according to S&P Global Market Intelligence.

What does this mean for Jordan? The consensus is that oil prices are unlikely ever to return to their heady $120 a barrel days, so Saudi Arabia and the rest of its oil-producing GCC partners have started to phase out their regular, no-strings-attached cash donations to Jordan. Financial assistance will instead come through organizations like the Saudi-Jordanian Coordination Council, which was recently established as part of Vision 2030 and which aims to funnel Saudi investments into specific projects inside Jordan, particularly with the Aqaba Special Economic Zone.